Automation, Strange Markets, and America’s Unwinding Labor Market

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On this week’s episode Tom, Jacob, and Dan talk about automation, lifestyle creep, housing prices, today’s interesting market, Apple’s India play, the undoing of America’s labor shortage, and earnings (with a key point on profit margins).

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Suggestion

Focus on Automation

• AI has changed the world already and it will unlock many things for us as people, workers, and investors.
• But while the world wonders about AI, everyone, I believe, should be focused on automation with their asset base and income.
• Automating your financial life is the easy, fastest way to ensure success. How? When you decrease the time between earning money (job income, dividend income, etc) and investing, you exponentially increase your net worth in the years to come. it’s just math. Many people have automated their finances to some degree. Your employer does this for you (they pay you every two weeks), the government taxes money from you every two weeks too, or quarterly if you are retired or self employed.
• Your utility and internet bill are automated. Your 401k is. Much is for many people but there hasn’t been enough done to yield above average results. And if someone is above average and easily accumulates cash, if there isn’t an efficient mechanism to invest, people end up sitting in cash.
• Automate, ruthlessly. Don’t even give yourself a chance to wait and spend it.
• AI automates tasks incredibly well, take a lesson from it and compound your potential.

What Went On

• How Much Lifestyle Creep is Okay?
• Will We Ever See Affordable Housing Prices Again? What is an affordable house? Current housing market update.
• Thoughts on today’s markets and what could lie ahead.
• Apple unveiled its first store in India, Bloomberg reported earlier this week that Apple reported nearly $6 billion in sales in the year ending in March.
• US prime-age labor force participation rate (the preferred metric) is back to 2019 levels
• Margins are getting pressed, and it’s most prevalent in Tesla (29.1% in q4’22 and 19.3% in q1’23 on higher revenues), but its because of price reductions. Producer prices tell this story all to well. Those seller prices have been falling and that ultimately means companies are getting compressed on margin.

Quote of the Week

“If you can convince people to pay $40 for $4 boxes of cereal, maybe, just maybe, you can convince strangers to live with each other,” - Paul Graham on Airbnb’s unlikely success

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